Monday, January 7, 2008

Dr. Jeffrey Sachs

Where were 'world history' and 'global economics' in high school? I was force-fed a lot of Shakespeare but nothing of the remarkable recent history of India, China, Russia, Japan, or a hundred other countries including all of Europe, the Middle East, Africa, South and Central Americas. Why not? The globe is not that big is it? Couldn’t you cover the relevant issues in one book? One course? I notice global politics on the news every day. The world is a busy place – we all appear to be connected. Why is modern world history not taught to Canadian children? I also learned nothing about ancient Greece or Rome; and very little about WWI or II and nothing about the Cold War. I certainly know nothing of the economics of these conflicts. No teacher ever defined Communism. Why not? Elections seem like a very sensible way to decide who spends our tax money - but nobody ever contrasted democracy with the ‘others’ and showed me hard facts. My grade six teacher told me that there would be 16 billion people on Earth by 2005. I suppose that makes him a liar. Is 'overpopulation' even a real problem? Did birth control already solve it? Is it really that simple? I know Canada doesn't produce enough children. Neither does Australia. Why not? Aren’t some European governments now paying women to be mothers? Are even Catholic women are refusing to have kids in Europe? That's not possible right? And why are there so many children in Africa? Can’t we dump a billion packages of birth control pills on Kenya? Would that work? No. Actually, it would not. Women in industrialized countries choose to have fewer kids. It appears to be a natural phenomenon the details of which make pretty solid sense. This seems wonderfully convenient. I guess some things are. This ‘industrial women’s choice’ angle is new to me. I consider myself to be highly educated but lately I am beginning to realize that I don't know much!

Poland

For example: Before my family immigrated to Canada I lived the first six years of my life in Poland. I did not learn until now (at 29) that twenty years ago Poland was forgiven half of its international debt - 20 billion dollars – mostly by German banks. My country, in my lifetime was handed 20 billion dollars for free, and nobody told me. But Poland is not a third world country - why did they need debt forgiven? I have a better question: how did Poland become a democracy? Did they convince the Communists to just 'let them go'? How? I don't remember a war? The truth is - I have absolutely no idea how it happened. I just heard 'Bravo! Solidarnosc! [Solidarity!]" and then it was done. What happened to all of the Communist state-owned factories and stores? Who owns them now? What the heck happened in Poland?

And while we’re at it

And while we're at it what happened - or rather 'is happening' - to Russia? And who woke up China? They have a big red flag but they don't act like Communists. What in the world is going on in China? China has no religions right? Doesn't India have every religion? But no athiests? Both China and India are industrialising very rapidly. How? Why? Why does my bank operate a call centre out of India? Why India and not Vietnam or Brazil? Did you know that Korea has millionaire pro-online-gamers? What? You heard me. And what in the world has happened between the United States and the Middle East – when, and why, did that get out of hand? The only modern conflict I have any understanding of is the one between Isreal and Palestine. That is not a mystery. It’s a ‘land’ thing – that at least makes sense.

Is there a 'point' coming soon?

Like it or not, you and I live in a rapidly changing world. The planet is busy. Keeping up with global affairs is a challenge. Making sense of them is even harder. CNN has one angle, the BBC has another, both are fighting for my attention. International news is depressing; very depressing. I prefer the NFL or Futurama. It is no less useful and far less sad (especially if you like the Pats). Do you ever take a step back and think about the big picture? What might life be like in thirty years? There is a lot to worry about. Today (after some editing and consideration) I will worry briefly about just one problem. Thirty thousand people died in Africa today – mostly children. Repeat that to yourself. What can you or I do about it? Ask this guy:

Dr. Jeffrey Sachs is a professor of economics at Columbia University in New York. He is director of something called the 'Earth Institute' which basically tries to solve all of the world's big problems. (And it is not a 'make believe' institute.) He is also economic adviser to the United Nations and to many troubled governments. It was sobering to learn that he is the ONLY academic that Time Magazine consistently ranks among the world's most influential people. He was a big deal in Poland in the late eighties. If you are Polish the details of his efforts are a must read. Wikipedia says that some of his advice is criticized by other academics and authors. It all made sense to me - but what do I know? In 2005 he published this:

The book was not what I expected. The author is not a ‘hippie’ with a world vision of the rich sharing with the poor and everybody hugging trees, dolphins, and each other. This book is primarily a lesson of modern world history. Dr. Sachs tells us what the heck has just happened and what is happening right now? He is personally involved in pretty much all of it. I knew embarrassingly little about this stuff. I was a blank slate. It was a bizarre feeling. Where have I been hiding these past few years? The book argues that ending third world poverty makes a lot more economic sense than people realize. The simple answer is - invest in Africa. It is true that billionaires are sharing the planet with starving children. Isn't it?

Dr. Sachs is an informed optimist - how cool is that! A reasonable, well-spoken man - and apparently in possession of what sure seems an awful lot like moral integrity. Plus he can add. I suspect that he has no financial need to sell books. Why does he bother to write them? Maybe he desires popularity? Maybe he wants to inform us just for the sake of informing us? What is the point of that? Maybe he thinks our opinion matters.

Debt forgiveness

Let me back up a bit to when Poland was handed 20 billion dollars for free in the late 80’s. This has no doubt helped Poland get back on its feet. Interest payments suck. It is January - we all know that. German banks agreed to forgive Polish debt partially because of a timely reminder of how their country was forgiven a huge amount of international debt forty years earlier. That is a big part of why Germany is prospering today. Many countries have been helped off the floor in recent history? Even the US has had debt forgiven - by France after the War of Independence. (Didn’t Will Smith make a cool space movie about that war?) Why does debt forgiveness happen? Why would any bank agree to forgive anything?

Trouble

'Hyperinflation' is when you go to the grocery story to find a $10 loaf of bread. Then two days later it's $100. A few weeks later it costs $100000 for a loaf of bread (even un-sliced). This happens. It happened in Bolivia, Poland and many other places in the 80's. It occurs, as I understand it, when some 'economic thing' is broken, seriously broken, and a government has started to print money. Not for fun, but because it is the only option that delays collapse. Collapse? What exactly happens when a government goes bankrupt? A business owner can file for bankruptcy, liquidate, pay what debts he can and forget the rest. He is protected by law from creditors who must accept that they made a bad investment. Everybody learns. It sucks. Life goes on. Nobody dies. Nobody dies because our society has decided that death is an unfair punishment for bad business decisions. In contrast, if an entire country goes bankrupt, people generally start dying. Some people starve, others kill each other. If you own a gun you load it. Somebody usually controls at least one army, their guns are bigger than yours. There's probably no gas at the station? Is there food? Are there hospitals? Or schools? You might find yourself feeling a strong urge to find a Red Cross truck - and you'll walk. The anarchy or civil war or general human misery continues until eventually some sort of leadership emerges. The new leadership probably has another 'losing strategy'. And then you do it all again. It's 2008 - surely we must know the recipe for an exit for such a country? I was born into a country with a losing economic strategy, a Communist strategy. My parents were lucky enough to have the option to jump ship long before I would understand their motives.

Economic Strategies

Here’s an obvious question: can a country avoid a losing strategy by 'not playing the game' at all? Not trade with anyone and not industrialize. In fact, that exact tactic has been attempted. It was originally called the 'Third World' strategy and was adopted by many countries after WWII. The 'Second World' strategy was the name given to Communism - state owned business. A 'First World' strategy meant a decision to play on the global market. Dr. Sachs might argue that the great lesson of the last sixty years is that free market international trade appears to work best. According to his book - you don't even have to be a top team to be rich. You just have to play the game. Every team gets to have full grocery stores and empty hospital beds with fresh sheets. This ‘global game’ is not analogous to a ‘poker table’ - a zero sum game – it is more like the NHL. Every team in a healthy professional hockey league is rich. Sachs tells us that despite what many people believe rich countries don't usually get rich at the expense of extremely poor countries. The First World has nothing to gain from extreme poverty in the Third World. But all wealthy countries prosper together. Why is that possible? To be honest with you - I don't really understand it – but I think it’s true. Here is my own idiot explanation. Every team in the ‘pros’ wins because sunlight is free. Literally, energy - coal, oil, fresh water, food - it was all originally sunlight. Stay with me here. If energy is worth money (and it was - last time I checked my bills) then the sun is literally giving away free money every single day (unless you're British). That's it. That's all. Because of free sunlight we can all be rich.

The Bottom Line

Can everyone on Earth potentially play in the pros? Can our little planet sustain one big pro-league without 'melting the ice'? Climate change is a whole other mess. I don’t know the answers. Many scientists are skeptical about the future for all of us. I have no inclination toward real pessimism. I don't see how that could ever help. Certainly awareness and thoughtful purchases and votes make sense. And I have it on very good authority that Jeffrey Sachs is about to publish another book - in March 2008 called - 'Common Wealth - Economics of a Crowded Planet' in which he will tackle sustainable development and climate change. And this guy is smart.

Quotes from JS

You probably stopped reading this foolishness long ago. I suppose it doesn’t hurt if I finish with some quotes from the early chapters of 'The End of Poverty':

'Until the mid-1700's, the world was remarkably poor by any of today's standards. Life expectancy was extremely low; children died in vast numbers in the now rich countries as well as the poor countries... Episodes of hunger and extreme weather and climate fluctuations sent societies crashing. The rise and fall of the Roman Empire... was much like the rise and decline of all other civilizations before and since...'"The key fact of modern times is not the 'transfer' of income from one region to another, by force or otherwise, but rather the overall 'increase' in world income, but at a different rate in different regions... Technology has been the main force behind the long-term increase in income in the rich world, not exploitation of the poor."'What changed was was the onset of the Industrial Revolution... The steam enginemarked the decisive turning point of modern history... Isaac Newton's PrincipiaMathematica in 1687, one of the most important books ever written... providingthe tools of calculus [to discover laws of the physical world]'''The beauty of ideas is that they can be used over and over again, without ever being depleted.''World War I ... led to several cataclysmic events that cast their shadow over the rest of the century... it destabilized the Russian czarist regime, unleashing the Bolshevik revolution... [and so on].'[today] half the world, including all of the rich world, is at or near the so-called replacement rate of fertility... High population growth leads to deeper poverty, and deeper poverty contributes to high fertility rates.' [It's a vicious cycle]'When countries get their foot on the ladder of development, they are generally ableto continue the upward climb. All good things tend to move together... higher capital stock, greater specialization, more advanced technology, and lower fertility. If a country is trapped below the ladder, with the first rung too high off the ground, the climb does not even get started."

Enough. Read it yourself. Cheers.

And if you know me well and you are starting to become concerned about me - please don't be. I am not turning into some sort of activist or politician. I dislike protests and hate politics. I simply read a good book which I thought it was worth telling you about. I have no desire to start adopting orphans.

I have made numerous edits to this post. A bit unorthodox for blog post. I'm done. If I took out something you liked I'm sorry - I guess I didn't like it :) More likely it just didn't belong. For now - a book review is better than a long scattered rant. I'm still a little too uninformed to be ranting so much.